Chargebacks are one of the most expensive challenges in payments. They don’t just mean lost revenue; they also come with fees, operational costs, and potential damage to your ability to accept credit cards. To help manage excessive chargebacks, Visa created the Visa Chargeback Monitoring Program (VCMP).
If your business processes Visa transactions, it’s good to understand how VCMP works. In this article, we’ll explain the program, thresholds, consequences, and most importantly, how you can avoid being placed in it.
What Is the Visa Chargeback Monitoring Program?
Many merchants don’t realize that credit card networks actively monitor their chargeback performance. The Visa Chargeback Monitoring Program (VCMP) is Visa’s way of ensuring that businesses don’t accumulate too many disputes. By tracking chargebacks on a monthly basis, Visa can identify when merchants cross certain thresholds and apply corrective measures.
The Visa Chargeback Monitoring Program (VCMP) is Visa’s system for monitoring merchants with excessive chargebacks. It was launched to protect consumers, reduce fraud, and ensure trust in the Visa network.
When a business consistently receives too many chargebacks, Visa steps in through VCMP. Merchants who exceed Visa’s chargeback thresholds are flagged and may face penalties, stricter monitoring, and eventually termination of their merchant account if the issue isn’t resolved.
Why Does VCMP Exist?
Visa has billions of cardholders worldwide and must maintain trust in its network. If chargebacks spiral out of control, both consumers and banks lose confidence in the payment system. The VCMP ensures that merchants operate responsibly and that disputes are kept within reasonable limits.
Visa designed VCMP for three main reasons:
- Protect cardholders: Ensure customers are treated fairly and not exposed to fraud or misleading practices.
- Encourage responsible merchants: Motivate businesses to take proactive steps to reduce chargebacks.
- Preserve network integrity: Maintain consumer trust in the Visa system.
Visa Chargeback Monitoring Thresholds
Not all chargebacks are treated equally. Visa sets clear thresholds that determine whether a merchant is simply nearing risk levels or has crossed into official monitoring. Understanding these thresholds is critical because the consequences escalate quickly once they are exceeded.
VCMP tracks merchants monthly based on two main factors:
- Number of chargebacks
- Chargeback-to-transaction ratio (CTR)
The thresholds vary depending on the severity:
Early Warning
- Triggered when a merchant approaches, but does not exceed, the standard threshold.
- Chargeback ratio between 0.65% and 0.9%.
- No penalties, but serves as a heads-up.
Standard VCMP
- More than 100 chargebacks in a month AND
- A chargeback ratio greater than 0.9%.
Excessive VCMP
- More than 300 chargebacks in a month AND
- A chargeback ratio greater than 1.8%.
Consequences of Being in VCMP
Being placed in VCMP doesn’t just create administrative headaches; it directly affects your bottom line. The financial and reputational consequences can be severe, making it essential for merchants to take chargeback prevention seriously before it gets to this stage.
Being placed in VCMP can have serious impacts on a business:
- Higher costs: Visa fines and increased processing fees.
- Closer scrutiny: Acquiring banks may require stricter reporting and monitoring.
- Reputational risk: Excessive chargebacks signal weak controls, which can hurt partnerships.
- Account termination: Continued non-compliance can lead to losing the ability to accept Visa cards altogether.
How Long Does VCMP Last?
VCMP isn’t intended to be a permanent punishment; it’s a corrective program. However, merchants who fail to take immediate action can remain stuck in the program for months, racking up fines along the way. The sooner chargebacks are brought under control, the faster the merchant can exit.
Merchants are reviewed monthly. Once your chargeback levels fall below the threshold and remain compliant for three consecutive months, you may be removed from the program. However, if chargebacks rise again, you can quickly be re-enrolled.
How to Prevent Chargebacks and Avoid VCMP
The best strategy is to never end up in VCMP at all. Fortunately, merchants can take practical steps to reduce disputes, improve customer satisfaction, and strengthen fraud defenses. Chargeback prevention should be an ongoing part of your operations, not just a reactive measure once problems arise.
1. Be Transparent With Customers
- Clearly describe products and services.
- Use accurate images and shipping timelines.
- Make refund and return policies visible.
2. Improve Customer Support
- Offer multiple support channels (phone, email, chat).
- Respond quickly to issues before they escalate.
- Issue refunds promptly when appropriate.
3. Use Fraud Prevention Tools
- Enable Address Verification Service (AVS) and CVV checks.
- Use 3D Secure (Visa Secure) to authenticate buyers.
- Flag suspicious transactions with fraud filters.
4. Monitor Transactions Actively
- Track chargeback ratios monthly.
- Review unusual spikes in disputes.
- Work with your payment processor to implement best practices.
5. Keep Good Records
- Save receipts, shipping confirmations, and customer communications.
- Provide compelling evidence if you choose to dispute chargebacks.
How Clearly Payments Helps Merchants
Merchants don’t have to navigate chargeback risk alone. Working with the right payment processor can make a significant difference in preventing disputes and avoiding VCMP enrollment. Clearly Payments partners with businesses to ensure they have the tools, reporting, and support needed to keep chargebacks under control.
At Clearly Payments, we provide the tools and support merchants need to reduce chargebacks:
- Built-in fraud prevention and security features.
- Clear reporting to track chargeback ratios.
- Expert advice on keeping your chargebacks below Visa’s thresholds.
